How Line2 accidentally disrupted the phone industry

Last week at CES 2012, I met up with Line2 CEO Peter Sisson; he is a man who's done a lot of butting heads with big companies over what started off as a pretty simple proposition. Line2's basic concept was to create a second line (for business or personal calls) on your iPhone. Sisson's original idea was just to have "two lines on one phone," but making that possible for users has turned out to be quite a headache over the years.

The issue, he says, isn't the technology at all. Line2 already has an iOS app out there that provides some pretty impressive services on both the iPhone and the iPad. We've looked at the service before, but it's only gotten better since it went live 18 months ago, now providing the ability to simply place a call (using an interface that's almost identical to the iPhone's regular phone app) over either VOIP or directly through Line2's telephone servers -- in other words, you tell Line2 who to call, and then they call your iPhone while simultaneously ringing the number. They can also answer and screen incoming calls, and all of your interactions are displayed in full conversation style. Especially on the iPad, the contacts and conversation menus look really impressive, and provide an excellent overall view of who you've talked to, about what, and when.

Sounds good, right? Unfortunately, that service has made plenty of trouble for Sisson to deal with. Besides the obvious issues with trying to run a phone line company through other people's phone lines, he's lately been dealing with Apple and its seemingly ever-changing subscription rules. Line2 currently operates under a subscription system: Because it obviously needs extra infrastructure to operate, users pay a per-month fee for the ability to make and use calls and communications. But though Apple recently enabled subscription charges through iTunes, it also requires a 30% cut of those charges, and for Sisson, that's not always doable.

"We don't really have the margin" of profit to give Apple 30% and make money, says Sisson. "We tried initially to do it without them." At first, Sisson tried to operate Line2 without selling subscriptions through iTunes, but Apple's requirements meant that the app itself couldn't mention the subscriptions at all, so all it could show was a login page without any explanation. Users who downloaded it directly from the App Store without any context were obviously confused. And while Line2 does bring in its own audience (most of the users, Sisson says, are businesspeople who use the phone either on the road, or simply as a second line at their desk), that audience of iTunes searchers who were turned off after downloading the app was too big to ignore.

So Sisson decided that Line2 would go ahead and deal with Apple's cut, and there is currently an app under submission for the App Store right now that has that built-in. He's hoping that the extra subscriptions generated from those new users will outweigh the cost of doing business with Apple. But he does say that it's been a pain to navigate through Apple's unclear rules, and while the restrictions are one thing, even more annoying has been that even Apple doesn't seem to know where subscriptions can start or end. It's like getting pulled over by a cop while going the posted speed limit of 55 miles per hour, says Sisson, and being told, "We're planning to change this road to 35 miles per hour."

Fortunately for new Line2 users, part of the new plan is also to go for a more freemium model: The new app, once approved on the App Store, will have some amount of free functionality even before any subscription is purchased. Sisson, again, is hoping that convinces more users who simply find the app on the store to stay and buy the full service. The app should be available as soon as it's ready.

As for the future, Sisson promises that "we'll eventually get to video." Video calling isn't a huge priority for him and his company right now, as he's mostly focused on making sure the audio calls are just right before moving on. But that is a feature to be worked on, and they're also looking into using voice controls to both manage calls and browse through the apps, very similar to what Siri already has working with Apple's native phone system.

The last feature he expects to implement is something called a "call queue." The idea for that one is that you'll set up a list of numbers that you need to call, and then just hit go on your phone. Line2 will then call those numbers for you, letting you know who you're about to talk to as you go. Finish one call, and the next number on the list gets rung up, so as you drive around town, you can take care of a series of calls without having to dial up a number in between.

Sisson's original idea was simple, he says, and the original impetus was just to provide a service he felt that he and others could use. But dealing with all of the disruptions created from just that idea has been more than he ever expected.